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This ignores the fact that everywhere (including countries where wealth taxes are implemented today), there is a floor below which the tax does not kick in.

• dccoolgai 6y ago
  And there's also a "ceiling" above which the super-wealthy manage to hire lawyers, accountants, etc. to make the rate effectively "0".
  • jmvoodoo 6y ago
    This. What all of these taxes accomplish is preventing people from becoming wealthy. In this way it benefits the people that are already wealthy by making it that much harder to climb the wealth ladder. Many of the tax increases on the "rich" really just tax the upper middle class and do nothing to tax people that are actually wealthy. If you want to tax the wealthy, then simplify the tax code and remove loopholes and deductions. Leave rates alone.
    • hnhg 6y ago
      Do they prevent people from becoming wealthy if there's a floor at 100 million?
      • jmvoodoo 6y ago
        No, but they also wouldn't be that effective at taxing wealthy people that would structure their wealth to avoid the tax. That's the issue. You either lower the limit to the point where you capture the upper middle class, or you don't get any revenue because wealthy people can avoid the tax entirely.
        • dccoolgai 6y ago
          Yeah, exactly: The floor is not going to be "100 million" for very long before they have to drop it to "100 thousand" because the people with "100 million" can change the way they structure their wealth faster than the regulators, because of regulatory capture and they'll need that money from somewhere. The upper-middle class carries almost the entire tax burden of the U.S. It's hard to boo-hoo about when you've got 2 cars, a single family home, etc. but it has an enormous negative impact on the economy to punish one tier of the economic ladder so hard.
• mrob 6y ago
  All breakpoints in tax systems contribute to market inefficiency, because they incentivize manipulating your finances to stay below breakpoints instead of maximizing efficiency. It would be better to apply a flat wealth tax and correct for the regressive effect of decreasing marginal utility of money with UBI.
  • robjan 6y ago
    That doesn't make sense. Once you hit a threshold, usually the amount of money below the threshold is taxed at 0% or a lower percentage, then anything earned on top is taxed at a higher rate. You still earn more money by earning above the threshold.
    • mrob 6y ago
      That's still a discontinuity in the marginal value of income. You don't need the slope of the post-tax income:pre-tax income graph to go negative for there to be inefficiency. Any sharp change in the curve is enough.
      • enragedcacti 6y ago
        is a 1% change sharp?
      • robjan 6y ago
        Where's the incentive to fiddle your taxes? Yes you can donate your money to bring yourself into a lower tax band but you will still never have more in your bank account by doing so. e.g if there is a system where tax is 10% then it goes up to 20% at a $100 income. If I earn 99 then my take home is 89.1 (99 * 0.9) if I earn 101 then my take home is 90.8 (100 * 0.9 + 1 * 0.8). Yes, the effective tax rate is higher but I can never take home more by deliberately earning less money.
        • O_H_E 6y ago
          Note: I am note defending any previous arguments, just trying to make a fact clearer. Your calculations was right in that idealistic tax system, but the real world is really messy with lots of exceptions, Tax credits, Benefits, and such. Building on your example, I will add a little Child Benefit to make a slightly less ideal idealistic-scenario. Assume If earning < 100: child_credit = 3 Assume 1 Child If earning 99: take_home = (99 * 0.9) + 3 = 92.1 If earning 100: take_home = (100 * 0.9 + 1 * 0.8) = 90.8 ----- I chose this example because I remember vividly a story about a family in the UK that avoided getting promoted because their take-home would decrease. Of course it have to be a very small promotion in order to not be worth it. I don't know if cases like this is rare in the US, but it is generally a thing.
• hexxiiiz 6y ago
  Very much. The numbers politicians have thrown around have had floors from 100 million to a billion. If Graham is speaking to the interests of future 100 millionaires I think most of them should be far more concerned about the country they live in when they almost assuredly never get anywhere close to that ceiling. For the few who do, who can shed tears when someone with 100s of millions is thwarted by government policy from reaching levels already so far beyond that which would compromise the happiness of an extremely privileged person. Nobody realistically suggesting something that is going to blunt startup Johnny's adventure to make enough money to buy a huge condo in SF, a Rolls Royce, a yaht, and a private waitstaff, if that is what Graham is raising alarms over. Johnny can keep dreaming.